Posted on 06/27/2003 7:05:48 AM PDT by nypokerface
OTTAWA (Reuters) - Canada's economy contracted 0.2 percent in April from March as manufacturing output fell and SARS hit the tourism sector, Statistics Canada said on Friday.
The month-on-month seasonally adjusted contraction was the first since a 0.7 percent fall in September 2001 and matched the expectations of analysts polled by Reuters. Output was flat in March from February.
"The war in Iraq, a weaker than expected U.S. economy, a stronger Canadian dollar, fluctuating crude oil prices and other events had inter-related effects in some industries," Statscan said.
The Canadian dollar weakened slightly after the data were released.
Statscan said the goods-producing sector, which accounts for roughly one third of gross domestic product, fell 0.7 percent, with declines in all industries but construction.
The services sector, accounting for about two-thirds of GDP, was unchanged as gains in investments were offset by a steep fall in the hotel and restaurant business during the first full month of the deadly SARS outbreak in Canada.
Canada is the only country outside Asia where people died of severe acute respiratory syndrome, and the outbreak forced the postponement of conferences and conventions in Toronto, Canada's largest city and its financial hub.
Statscan said Canada's export-oriented manufacturing output fell 0.3 percent, the second drop over the last three months.
The construction sector rose 0.2 percent, but housing starts declined for a second consecutive month after reaching a peak of 255,000 units in February.
The services sector saw declines in wholesale and retail trade and in transportation. But the 2.1 percent fall in accommodation and food services was the steepest.
"Activity levels in the hotel industry were down 6.0 percent in April, compared with a 13 percent decline in September 2001. The hotel occupancy rate in downtown Toronto was in the 40 percent range instead of its usual seasonal range of 70 percent in April," Statscan said.
In a separate report the government statistics agency said industrial prices fell 2.0 percent in May from April as the Canadian dollar rose against the greenback -- figures that point to a steep decline in overall inflation rates.
A Reuters poll of analysts had forecast a 0.8 percent fall in May, after April's 1.4 percent fall. Statscan said May industrial prices were 1.7 percent below the May 2002 levels.
Excluding the effect of the U.S. dollar, which has been falling against most major currencies, total industry prices would have fallen 0.5 percent instead of 2.0 percent in the month.
The raw materials price index fell 2.5 percent in May from April mainly due to the fall in mineral fuel prices. On a year-on-year basis, raw material prices dipped 0.5 percent.
($1=$1.35 Canadian)
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